Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...
Dec. 17 --While most surveyed employers (55 percent) have implemented a pay-for-performance program, almost half (45 percent) expressed dissatisfaction with their program, according to Mercer's "2013 Pay for Performance Survey."
"That organizations are not satisfied with their pay for performance programs suggests that traditional financial incentives--the most common approaches--may be overused in situations or contexts where they are not the optimal choice," Brian Levine, partner and Workforce Analytics & Planning leader for the global consulting firm's North American Region, said in a Dec. 12 press release.
"There is often misalignment in terms of how the programs are implemented, and that's why there is a lack of satisfaction," Levine told Bloomberg BNA Dec. 16.
For rewarding performance, most organizations focus on financial incentives, according to the survey. Base salary increases and annual or short-term incentives remain the rewards most often linked to performance, reported by more than 85 percent of participating organizations.
However, this focus on financial incentives can present many challenges to employers, Jeanie Adkins, partner and co-leader of Mercer's Rewards practice, told Bloomberg BNA Dec. 16.
Survey findings revealed top performers receive twice the base pay and short-term incentives of average performers, which "does not leave enough money for the rest of the employees in a given organization," Adkins said. Furthermore, 63 percent of organizations indicated they are working to increase differentiation of pay based on performance, compared to just 2 percent trying to minimize it, she added.
It is also challenging to define the measures and metrics that will lead to the best implementation of a pay-for-performance program, Adkins said. In some industries, such as technology and innovation or research and development, performance goals may take a few years, and not align with annual assessment programs, she added.
The Mercer survey results are based on responses from more than 570 employers across all industries throughout the U.S. and Canada.
For companies looking to implement an incentive program with the intent of paying for performance, Levine advised them to first look at the conditions of the work. For example, if the fundamental goals of the company are complex, or involve coordination and cooperation among employees, that needs to be taken into consideration.
According to Levine, alternative incentive models include:
To contact the reporter on this story: Genevieve Douglas in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Simon Nadel at email@example.com
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)